BOGUS OIL-FUNDED STUDY SAYS ENERGY BILL THREATENS DRIVING

House Climate Bill Would Boost Reliance on Imported Gasoline -- Industry Study
Ben Geman, August 24, 2009 (NY Times)
and
Study lists House clean air bill's possible refining impacts
Nick Snow, August 24, 2009 (Oil & Gas Journal)

SUMMARY
Waxman-Markey (H.R. 2454) Refining Sector Impact Assessment, prepared for the American Petroleum Institute by EnSys Energy, uses a narrow take on the energy and climate legislation to conclude the gas for U.S. personal transport could be drastically impacted if the legislation becomes law.

The bill passed by the House of Representatives in June is presently being used as a basis for energy and climate legislation to be considered by the Senate when the battle over health insurance reform is resolved.

EnSys based its calculations on a least-likely, worst-case scenario outlined in Energy Market and Economic Impacts of H.R. 2454, the American Clean Energy and Security Act of 2009, a recent report from the Energy Information Administration (EIA) of the U.S. Department of Energy (DOE).

Using the least-likely, worst-case scenario, EnSys suggests U.S. refining capacity will fall off and implies gasoline for internal combustion engine vehicles would then be drastically less available and more expensive in 2030.

Not really. (click to enlarge)

COMMENTARY
This just dogs my cats!

EnSys assumes the least likely of EIA's scenarios. (click to enlarge)

The oil industry is trying to whup up some consumer terror by using a tilted study to suggest everybody’s driving is threatened by pending energy and climate legislation.

POPPYCOCK!

The oil industry-funded study does not show driving in 2030 will be affected. It shows that driving with fossil fuels will be affected. That’s part of the point of the bill! One of it’s stated intentions is to cut the use of imported oil.

This is just an impression based on a scan of the polls, but it looks like most people think cutting dependence on imported oil is a pretty good idea.

As Representative Henry Waxman (D-CA), Chair of the House Energy and Commerce Committee and co-author of H.R. 2454, told NewEnergyNews at a recent press opportunity, the bill is designed to (1) cut U.S. greenhouse gas emissions (GhGs) 17% (or more) by 2020 and put the nation on track to cut its GhGs 83% by 2050, (2) deliver billions for New Energy and Energy Efficiency, (3) make the nation more secure by turning it away from dependence on foreign oil and (4) contribute to the economic rebound with a big infusion of jobs and revenue-producing investment.

EnSys predicts high allowance prices. (click to enlarge)

ACES will, it is true, increase the business-as-usual costs for the oil industry over the long term. Should the oil industry take this personally? Perhaps. Less free allowances for the generation of GhGs will be allotted to Big Oil than to some of the other serious emitters, like utilities and coal plants, in the cap&trade system the legislation would establish.

That is because aims of both the cap&trade system and the bill include (1) shifting the nation’s driving habits toward alternative fuel vehicles and (2) protecting consumers from sudden, drastic increases in electricity prices. By allotting at no charge 85% of the allowances in the system to fossil-fuel-dependent electricity providers during its formative few years, ACES provides a temporary subsidy which will protect ratepayers.

Gas pump prices are protected differently. The bill’s injections of capital into battery electric vehicles and other alternative fuels will increase the presence of oil’s competitors in the marketplace, reduce demand for refined petroleum products and keep pump prices low.

EnSys bases its allowance price projections on the highest predicted but least likely costs. (click to enlarge)

The allotment of free emissions allowances drops off over time, rewarding electricity generators who transition to New Energy and Energy Efficiency. ACES also increases the burden on the oil companies over time. Eventually, gas pump prices will surely be prohibitive. By 2030, when this EnSyS study funded by the American Petroleum Institute predicts the sky will fall on gasoline-fueled drivers, the availability of alternative forms of personal transportation will be so widespread that it will be irrelevant for the majority of U.S. drivers what the price of gas at the pump is. And the big fall in demand will likely keep prices affordable for those still driving antiques.

The EnSys study, it must be emphasized, is slanted because it focused on the absolute worst possible and least likely scenario of those hypothesized in the EIA's extensive detailed and authoritative study of the H.R. 2454.

EnSys assumes the lowest predicted but least likely level of increased electricity demand. Electricity demand will grow with the use of vehicles that run on electricity instead of gasoline. (click to enlarge)

As reported by NewEnergyNews August 5 (see THE COST OF CUTTING SPEW), the EIA conclusions were divided into 6 main categories, based on the 2 main things the cost of emissions reductions might depend on, (1) the role of offsets and (2) the “timing, cost, and public acceptance” of New Energy and Energy Efficiency technologies.

EIA’s report clearly stated that the predicted scenarios most UNlikely to actually occur are those that depend on almost everything going right or almost everything going wrong. It specifically described its base case and several other scenarios similar to the base case as the MOST likely. And it specifically described the “No International/Limited Case” – on which EnSys formulates its critiques of ACES – as much less likely because those calculations assume there are no international offsets and no further growth of New Energy/Energy Efficiency technologies, nuclear, fossil with CCS, and dedicated biomass through 2030.

EnSys assumes the highest predicted but least likely level of increase in household energy costs. (click to enlarge)

Because the oil industry is most definitely a part of the problem and has refused for decades to be a part of the solution, it will certainly be forced to adapt to a world that finally, at long last, recognizes the dreadful cost burden of burning fossil fuels and begins charging for doing so.

Overall, costs to the consumer for the bill in the most likely case scenarios will be moderate (and much less than the costs of dealing with the worst impacts of global climate change if no action is taken now).

Interestingly, the sky-is-falling comments from API accompanying the release of the study came with the complaint that the refining industry should get more of the free allowances being allotted for the cap&trade system. In other words, the sky may be falling but if Big Oil gets its share of the booty, let it fall.

More likely: EnSys bent its study to leverage the Senate into giving the oil industry more free allowances. (click to enlarge)

QUOTES
- NT Times: "The House-passed bill would 'lead to significant gains in non-U.S. refinery capacity, investment and employment at the expense of the U.S. refining sector,' states the report, released by...consulting firm EnSys Energy."
- Jack N. Gerard, President, API: “This study clearly shows the devastating impact this legislation could have on US jobs and US energy security…Climate legislation should not come at the expense of US economic and energy security. Congress needs to analyze carefully the impact of any climate policy on ordinary Americans, American jobs, and American companies…”
- Dan Weiss, director of climate strategy, Center for American Progress: "One of the major assumptions underlying this whole report [that U.S. oil refining will move overseas] is a complete fantasy…[Its conclusions are, therefore,] garbage in, garbage out."